The current statistical picture of the world is probably the best it has ever been. But it also entails major limitations. In this article we show the limitations by focusing on three key areas: security, economy of development and the environment, and argue that they undermine the performance of global governance, and the possibility of global policy. In particular they do not allow taking the full measure and managing optimally the changes underway at the global level. To overcome this state of affairs, upgrading statistical capabilities is critical. To achieve this objective, the article suggests, among other ideas: adjusting and adapting the conceptualization, collection and implementation of statistical data to a world that is on its way to becoming global; improving the conditions of compilation of statistical data in developing countries; and investing in institution-building and innovation, in developed and developing countries, and in national and international organizations. Policy Implications• Optimizing policy and management in a world partially or fully globalized calls for the need to adjust data that is 'part and parcel' of public policy.• It is necessary to continue to improve the modalities of compilation of statistical data. Hence, making more efforts for standardization and helping support further developing countries to collect data.• The need to invest in institution-building and innovation, in developed and developing countries, and in national and international organizations. This entails improving the ways in which data professionals are trained, conduct research and then exercise their profession.• Increase the level of transparency of data conceptualization, production and dissemination in order to address the growing problem of lack of trust, especially in the financial and economic areas following the mismanagement of information in the context of the 2008 economic crisis In recent years taking the global governance and global policy agenda seriously is emerging as a more and more pressing requirement. The growing globalization of the world (Aart Scholte, 2008), with developments such as the spread of information technology (IT), the Janus face of economic globalization (generating within and among nations, integration and disintegration, winners and losers (de la Dehesa, 2006)), and the 2008 financial and economic crisis and its impact, makes countries increasingly interdependent and in need of being better globally managed in order to optimize opportunities and minimize risks. At the same time, this global governance/global policy agenda continues to be an uphill battle. One of the reasons for this is that the data that global governance and global policy rely on to formulate and implement governance and policy has serious shortcomings.Indeed, although the statistical data available today amounts to the best picture ever put out at the national, regional and global levels, 1 it is not necessarily good enough to satisfy the demands of the present time, let alone the ones of tomorrow....
This paper investigates the effect of financial fragmentation on the monetary transmission mechanism in different Euro area economies, categorized into two groups: countries considered as “core” economies and countries characterized as “peripheral” economies. We analyze the effects of financial fragmentation on the monetary transmission mechanism through the traditional interest rate channel. To gauge the impact of changes in policy rates on the behavior of real variables such as aggregate output and employment we use a Smooth Transition VAR (VSTAR) model. Employing a nonlinear multivariate time series approach helps us capture the regime-dependent dynamics of the variables under study. The results obtained show that money market rates targeted by the central bank do not completely pass through to banks’ lending rates to firms, particularly in a financially fragmented environment. This finding supports the hypothesis of an impairment of the monetary transmission mechanism as a result of financial fragmentation. Given this impairment in some sectors and regions an accompanying credit volume policy might have been appropriate.
Climate policy needs to set incentives for actors who face imperfect, distorted markets and large uncertainties about the costs and benefits of abatement. Investors price uncertain assets according to their expected return and risk (carbon beta). We study carbon pricing and financial incentives in a consumption-based asset pricing model distorted by technology spillover and timeinconsistency. We find that both distortions reduce the equilibrium asset return and delay investment in abatement. However, their effect on the carbon beta and risk premium of abatement can be decreasing (when innovation spillovers are not anticipated) or increasing (when climate policy is not credible). Efficiency can be restored by carbon pricing and financial incentives, implemented in our model by a regulator and by a long-term investment fund. The regulator commands carbon pricing and the fund provides subsidies to reduce technology costs or to boost investment returns. The investment subsidy creates a financial incentive that complements the carbon price. In this way the investment fund can support climate policy when the actions of the regulator fall short. These instruments must also consider the investment risk and the sequence of their implementation. The investment fund can then pave the way for carbon pricing in later periods by preventing a capital misallocation that would be too expensive to correct. Thus the investment fund improves the feasibility of ambitious carbon pricing.
Europe's financial landscape has substantial institutional variety. This reflects different societal responses to (or preferences with regard to) trade-offs. For monetary policy, it implies a challenging environment, particularly in times of financial crises. Using a non-linear VAR-model we document diverging responses to an identical monetary policy impulse, especially between two states of nature (regimes). Crucially, with such heterogeneity between countries in crisis, monetary policy can become, counter-intentionally, destabilizing. Thus, a more homogenous financial infrastructure could mitigate such counterproductive policy effects. However, the underlying reasons for the institutional variety are rooted deeply in societal compromises. And convergence must not necessarily be towards a stronger emphasis on capital markets. Zusammenfassung: Der Europäische Finanzsektor ist durch eine erhebliche institutionelle Vielfalt gekennzeichnet. In dieser kommen unterschiedliche gesellschaftliche Antworten (oder Präferenzen) in Bezug auf Zielkonflikte zum Ausdruck. Die einheitliche Geldpolitik ist damit vor besondere Herausforderungen gestellt, das gilt insbesondere in Krisenfällen. Mit Hilfe eines nicht-linearen vektorautoregressiven Modells dokumentieren wir die unterschiedlichen Reaktionen auf einen identischen monetären Impuls. Die Unterschiede werden insbesondere in zwei Regimen erkennbar. Zentral ist, dass vor dem Hintergrund einer solchen institutionellen Heterogenität die Geldpolitik, entgegen ihrer Absicht, in Krisenländern destabilisierend wirken kann. Von daher könnte eine einheitlichere finanzielle Infrastruktur die kontraproduktiven Politikwirkungen abmildern. Die Gründe für die institutionelle Vielfalt wurzeln allerdings tief in gesellschaftlichen Kompromissen. Und Konvergenz muss nicht notwendigerweise eine stärkere Betonung der Kapitalmarktausrichtung bedeuten.
This paper analyzes the implications of investors’ short-term oriented asset holding and portfolio decisions (or short-termism), and its consequences on green investments. We adopt a dynamic portfolio model, which contrary to conventional static mean-variance models, allows us to study optimal portfolios for different decision horizons. Our baseline model contains two assets, one asset with fluctuating returns and another asset with a constant risk-free return. The asset with fluctuating returns can arise from fossil-fuel based sectors or from clean energy related sectors. We consider different drivers of short-termism: the discount rate, the nature of discounting (exponential vs. hyperbolic), and the decision horizon of investors itself. We study first the implications of these determinants of short-termism on the portfolio wealth dynamics of the baseline model. We find that portfolio wealth declines faster with a higher discount rate, with hyperbolic discounting, and with shorter decision horizon. We extend our model to include a portfolio of two assets with fluctuating returns. For both model variants, we explore the cases where innovation efforts are spent on fossil fuel or clean energy sources. Detailing dynamic portfolio decisions in such a way may allow us for better pathways to empirical tests and may provide guidance to some online financial decision making.
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